Well, it's taken a bit longer than I thought but we have finally closed on this duplex in Kansas City. The transaction was a bit irregular - not one of the normal REO (real-estate owned) or post-foreclosure properties that we target, but a good deal nonetheless.

It raises a few issues that I hope will be of interest to would-be buyers of US property that it is important to canvas.

We had hoped to get this deal wrapped up over a month ago. Just to refresh the memory of those who read the first few posts on this deal, this one is an old house on a big block in a reasonable part of Kansas City. The property has been divided into two units.It was for sale for $23K with a $5K fee to the buyer's agent for securing the property and overseeing the necessary $15K of repairs.

Let's start with the $5K fee - a lot of of vendors and some investors in US property are adamant about not buying "flipped" property and will obsess about trying to eliminate middlemen from every deal often missing out on the property.In some circumstances that's desirable or even necessary, but there is no golden rule and as foreign investor, sometimes you have to reward a capable middleman or woman as you aren't on the ground in the market yourself. If it still makes a great yield after the mark-up, what's the hassle? In this deal, we have dealt with the agent before and we know that he makes his living by securing properties at below wholesale prices and adding $5K to each one he passes on, plus he arranges property management. Personally, I can live with that - wholesalers or buyer's agents have to make a living somehow and I prefer fees to be spelled out clearly rather than being embedded in the price in a non-transparent manner. In addition, as his skills are in rehab and property management, I feel he brings $5K of value to the deal in terms of providing a binding estimate of rehab costs and only passing on properties in good areas that he knows will be tenanted easily.

As I said before, we normally target bank-owned or real-estate owned properties that are offered to us via trusted wholesalers or agents. This time, although we knew the buyer's agent, the place was not foreclosed on. The owner needed money and was known to the buyer's agent and was willing to sell. The price was well below fair market value and would bring in more than $14K per annum in gross yield, so we were interested, whatever the circumstances. We were a bit more wary than usually given this wasn't a traditionally distressed seller. Ultimately, though, it looks like he didn't have the cash to perform the rehab needed to sell the place conventionally, so was willing to let it go to someone who could for a substantially discounted price. It stacked up on the figures so we decided to proceed, only we hit a snag that many foreign investors in US property will eventually run up against - a problem with title.

The title agency we were using for the transaction did their job well and discovered a lien against the property - a lien is essentially a right to the property that the owner has pledged to another party as security against a debt. Naturally you don't want to be buying a place with lien over it as your ownership of the property would then stand to be disputed by the lien holder. In this case, the lien was given to a former business partner of the owner. Often these hurdles can take months or more to unpick, but this time the two parties remained in contact and with a week or two, the owner of the lien had agreed to relinquish it for $500.

So, we have finally closed and the place is ours. Arguably, now the hard work really begins with $15K of rehab to be done. We have seen detailed pics and are under no illusions about the scope of the work. But under the contract clauses that we insisted on, any cost overruns are down to the agent as we have capped the cost at $15K and insisted that it pass inspection with any defects to be remedied at the agent's expense. The tradespeople he is using have done work on one of Ken's properties and performed an excellent job, so there is a level of trust there. All the same, we will probably release the $15K in installments just to be sure.

Fingers crossed all goes well and we may update the blog again with details of how the rehab and tenant placement went with this one.